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An Ohio-based Medicaid managed-care company is poised to end its legal action against the state.
Last year it accused the Ohio Department of Medicaid of bias and conflicts in a $22 billion bidding process. Toledo-based Paramount Advantage now says that if the department approves a deal for Anthem to take over Paramount’s patients, it will drop plans to appeal a lower-court ruling that dismissed its attempt to stop the huge procurement.
“Ensuring quality care for members and minimizing local job losses have been top priorities for Paramount since we learned that we had not been awarded a contract for the Ohio Department of Medicaid’s (ODM) new managed care program, which starts on July 1, 2022,” Paramount said in an emailed statement. “Entering into this agreement with Anthem will help address concerns related to these top priorities. And, if the transaction closes as planned, Paramount will not pursue further legal action against ODM.”
The plans were first reported by Hannah News.
If the deal is approved, it will end a bitter challenge by Paramount to a procurement undertaken by Medicaid last year.
Seeking to reshape the state’s Medicaid system, the department issued a request for applications by managed-care providers to show how they would prioritize the health of individual Medicaid recipients, who make up 25% of the Ohio population. At $22 billion, it was the biggest public procurement in Ohio history.
After years of claims that pharmacy middlemen working for managed-care providers were ripping off the state, the Medicaid department is taking that business away from those companies and is hiring a single drug middleman that will work directly with the Medicaid department.
Also as part of the overhaul, the department is hiring a single company that will create a continuum of services for 60,000 Ohio kids with complex behavioral health needs. The $1 billion program will work closely with the managed care providers under the revamped system, Medicaid officials have said.
Plans call for the new system to be implemented in July.
When the Medicaid department selected six companies to handle managed-care and another to run OhioRISE, the childrens’ program, it passed over Paramount, a longtime managed-care provider in the Ohio system. The department said the company’s application didn’t adequately explain how it would achieve the new goals the state was setting for its Medicaid program.
Paramount sued over the decision, and in court in October and November, it presented evidence that it was penalized for being relatively small and operating only in Ohio.
It also said the procurement didn’t consider that some of the huge companies that were selected had been accused of massive wrongdoing against Ohio taxpayers.
For example, the Medicaid department restarted talks with Centene-owned Buckeye Health Plan in August — just six months after the company announced it was paying $88 million to settle claims that it bilked tens of millions from the Ohio Medicaid program. The company also announced that it was setting aside $1 billion more to settle similar claims in other states.
Also, UnitedHealth Group’s United Healthcare Community Plan of Ohio was one of six companies selected for a multi-billion-dollar managed-care contract. It got the business even though the state is actively suing its pharmacy middleman, OptumRx, on claims that it ripped $16 million off of the Ohio Bureau of Workers Compensation.
In addition, Optum and CVS’s pharmacy middleman, CVS Caremark, were the companies accused of improperly inflating the prices of Medicaid drugs — charges they deny. Despite the claims, CVS’s Aetna got the billion-dollar OhioRISE contract.
In court, Paramount also pointed to potential conflicts of interest.
Medicaid Director Maureen Corcoran has disclosed that in the past she owned at least $1,000 worth of stock in CVS and UnitedHealth Group, but she’s refused to say just how much she owned as she was negotiating and signing huge contracts with their subsidiaries.
And Mercer, the $9 million consultant that facilitated the procurement, refuses to say whether any of the selected clients also have consulting contracts with Mercer.
Franklin County Common Pleas Judge Julie M. Lynch on Nov. 10 dismissed Paramount’s case after disallowing evidence of the possible conflicts. Just after the dismissal, Paramount’s lawyers said they would appeal.
But Paramount and its parent, Toledo-based ProMedica, thought better of the strategy. It says it’s turning its business over to Anthem because it believes it’s the best of the six newly selected companies to provide care to Paramount’s Medicaid clients.
The two companies also are looking for landing spots for hundreds of Paramount employees.
“Anthem and ProMedica are working to identify open roles within both organizations that may interest affected Paramount employees,” Paramount said in a statement. “This would create opportunities for Paramount employees to join Anthem or continue with ProMedica in a different capacity.”
For its part, Anthem said it’s up to the task.
“Anthem has served the whole-health needs of Ohioans for more than 81 years and we look forward to expanding access to comprehensive, high-quality healthcare services for more Medicaid-eligible individuals,” Greg LaManna, Anthem Blue Cross and Blue Shield’s Medicaid President in Ohio, said in an emailed statement. “This transaction expands our commitment to further the Next Generation of Ohio Medicaid Managed Care in advance of the new Medicaid contract.”
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